How does today's 30 year old retire at 55?

After just turning 30 this summer I've had this overwhelming feeling that it's time to get serious about the future. Time for Dreams to become plans and plans into action. At the top of any 30 year olds list has got to be not only retiring rich but retiring young. Not that my dad would ever hear me admit this but 55 is still very young, especially these days with the advances in modern medicine. So how does one make sure they've got the means to enjoy the empty nest years? And what does it really take to ensure a comfortable retirement and nice legacy for our children?

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It seems to me that 2 million dollars and 100k per year in passive income would tic both boxes by most peoples standards. OK but how does someone with no pension plan, zero faith in governed CPP and a shaky history with RRSP's put his vision of retirement not only in motion, but on auto pilot?

Well assuming for this example that life's most effective bank account draining creatures called kids appear in approx. 5 years, we've got a window to take this disposable income and put some of it to good use. This plan involves the investment in 3 rental properties at an average value of 250k that have positive cash flow purchased over a 5-year span. A person’s plan to have kids or not is not the crux of this plan; I just work better with a deadline! Thanks to a very handy app on my IPad that saved me hours of algebra and a solid understanding of market fundamentals, I was able to come up with the simplest formula to achieve the 2 million dollar portfolio with 100k income

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Acquiring real estate holdings beyond the primary residence is something that many cultures seem to grasp a lot better than the average Canadian. I can't tell you how many elder Europeans and Asians I've encountered with massive portfolios of real estate worth millions despite their modest earnings their entire career. So what does it really take? What is the real commitment here? Simply put, it starts with 50k representing your 20 % down payment on your first quarter million dollar holding property. It also requires reasonable credit and reasonable income, nothing fancy.

After the first one, the clock starts. Sometime over the next 3 years it's your mission to generate or find the next 50 k down payment and once more in the following 2 years. For some it will be diligent saving by living within their means. For others it will require proceeds from property flips or some other successful venture. And for many it will be borrowed from their primary residence with a credit line, or any combination of the above. The bottom line is it’s not all that difficult. It starts with a decision; followed by seeking some help from professionals like realtors, mortgage brokers and financial planners to help you maximize your returns. There all kinds of nuances that can take this plan and ramp it up even further, but the nuts and bolts of it couldn't be simpler.

So now after all that I better explain the numbers and show the example in action. Some very conservative assumptions have been made for the purposes of this example the historic appreciation rate of real estate (5%) and the historic inflation rate of rents and expenses (3%) applied to a 25 year timeline for holding 3 investment properties bought at various stages of the first 5 years. Here are the highlights however the entire investment picture can be found in PDF by clicking here.

Total Portfolio value in 25 years $2,276,913

Annual net revenues from rent $ 102,844

25 year Return on Investment 2,055%

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Skeptics may say this is pie in the sky; however I believe it is very conservative to expect the 250k house in Kelowna to be 750k after 2 complete market cycles. One look at what people pay over a million for only a 48 min flight away at this very moment and a glance at any real estate price index chart for the past 100 years and it would be tough to refute. If the growth we've had in the 25 years in Kelowna while I've been here is any indication of what's to come, the future is very bright indeed for our beautiful lake city.

This model applies whether you're 20 or starting at 50. The 30 to 55 illustration works because it fits the social norms but the reality is it’s never too soon or too late to implement an investment strategy like this. In fact I started this at 20 and I expect I will be doing it at 80. The moral to the story is a wise man doesn't wait to buy real estate; he buys real estate and then waits...

AJ is the owner of Kelowna’s downtown boutique firm, Vantage West Realty. The firm takes pride in breaking the mould when it comes to how they practice real estate. With a well-deserved reputation as a real estate renegade, Hazzi has been shaking up the Kelowna real estate scene since 2002.

Having been a student of real estate through two market cycles, AJ has come to see an absence of truly qualified professionals specializing in investment real estate. This has become AJ’s role within the firm and the community: To educate clients on how to achieve financial freedom through real estate.

Arming his clients with knowledge on where to find positive cash-flow, how to renovate for profit, and other creative avenues that most agents completely ignore, Hazzi has carved out his niche as a real estate investment advisor (REIA), and loves nothing more than educating people on the right strategy to capitalize on both boom and bust years. AJ is a firm believer that the Kelowna market is rich with opportunity, if one knows where to look.

If you are in search of an advisor who practices what they preach, consider that AJ has built his own real estate portfolio up to include multi and single family cash-flow rental properties, development property, resort property, fix and flips, and commercial properties. By sharing the lessons learned from his own experiences, his clients get the knowledge and confidence to invest without having to make the expensive mistakes he and many new investors have made along the way.

His goal is to impart on people, especially of the X and Y generation, that depending on RRSPs and Government Pension Plans to look after us down the road is risky business. Most people don't realize that as little as one or two properties added to your real estate portfolio now, can secure a comfortable, even lavish, retirement.

Bringing a consultant's approach rather than the tired, old-fashioned sales approach, AJ and his partners offer a world class service from finding, pre analyzing, and negotiating your next acquisition, to property management, all tailored to today’s busy investor.

To hear what AJ Hazzi's clients have to say about his service view the testimonials.